The Short Vertical Spread (aka Vertical Credit Spread) is the most basic options trading spread. A Short Vertical Call Spread is a bearish/neutral strategy that consists of a Short Call and a Long Call… And a Vertical Put Spread is a bullish/neutral strategy that consists of a Short Put and Long Put.

Use this option spreads strategy to sell option time premium with very little risk and capital. Vertical spreads usually work well when the markets are sideways. They're not a preferred strategy of most of our instructors but it's a strategy you can deploy when you want to create a little more P&L (profit and loss).

Below is the trade Ryan Sizemore put on (click the image to enlarge it) then a video of him explaining it below.

The key take aways:

1. Understanding the price chart first matters: This tells you whether to deploy a Vertical spread or directional option strategy.

2. You have to understand how to structure a trade: Vertical spreads are great but the profit is limited. This makes it harder for smaller accounts to make any significant money.

If you want to learn more about our investing & trading community you can begin by getting a 60 Day Guest Pass. This gets you access to our 24/7 chat room and a personal 1-on-1 trading assessment with one of our instructors.

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. With regard to any testimonials posted on this site, please note that any references to performance depends on each individual’s unique skills, time commitment effort and capital. Individuals sharing their results have not been compensated and any results have not been independently verified. Results may not be typical and individual results may vary.﻿